From waste to worth

Circularity refers to a system aimed at eliminating waste by continuous use and reuse of existing resources, in contrast to the traditional take, make, dispose – linear economic model. Increasing circularity is fundamental to achieving sustainable material and product value chains.

The concept of circularity is linked with various areas of business, from product design and operating models to end-use, recycling, and waste management – for example, product design is key to enabling circularity by making reusable and/or recyclable products.

Some of the key indicators for measuring circularity are related to recycling – recyclability of a product, recycling rate of a material, or share of recycled content in a product.

One circularity topic that has consistently remained in the spotlight this century is plastic recycling, with widespread attention on how regulations and businesses are working to increase recycling rates.

Concerns about plastic waste are linked to multiple issues – from plastic pollution in our environment, to emissions related to plastic waste, and the desire to replace virgin plastics (a fossil resource) with recycled and/or bio-based alternatives. Some other materials, such as paper and metal, have been successfully recycled at high rates for a long time – reducing waste generation and the need for virgin resources. For example, the recycling rate for paper & board packaging in the EU has long been above 80%, while the recycling rate for plastic packaging has stagnated at around 40%.

Waste as resource in circularity road

Plastic packaging, recycled volume, and waste generation

Industries such as paper and metal have successfully scaled up recycling, with this success having largely been driven by economic incentives—for instance, recovered paper pulp is often cheaper than virgin pulp.

In contrast, plastics recycling has struggled to reach similar viability due to a range of challenges, including the diverse material properties of different plastic types, their typical end-uses, and limitations in current recycling and sorting technologies.

As a result, the economics of large-scale plastic recycling remain a complex and unresolved equation for most plastic types. This means that the majority of plastic waste is still landfilled or sent to incineration.

In the EU, regulators are actively reshaping the economics of plastic recycling by imposing various mandatory targets and measures that compel market adaptation, such as recycling rate targets, landfill restrictions, introducing extended producer responsibility (EPR) fees, and increasing recycled content requirements in plastic packaging.

One of the upcoming measures that EU policymakers hope will incentivize improved plastics recycling is the expansion of the EU Emission Trading System (ETS) to cover waste-to-energy facilities, which have currently been exempt from ETS in most EU member states.

This expansion is expected to increase the cost of sending waste to incineration, as waste-to-energy operators are looking to pass through the costs of the ETS to waste suppliers, in line with the polluter pays principle of EU environmental policy. This would increase the cost of sending mixed solid waste to incineration by an average of 60 to 80 euros per tonne by 2030.

This kind of cost increase will enhance the attractiveness of separating plastics from mixed waste streams, as the amount of plastics in the residual stream directly impacts the cost of ETS associated with waste handling costs at incineration sites.

Simultaneously, new options such as chemical recycling technologies are rapidly emerging to find new ways of dealing with previously hard-to-recycle plastic waste streams. Still, these technologies are not all-encompassing solutions, and chemical recycling is also limited by factors like the types of plastics they are able to process, and the amount of contamination allowed in the input stream.

Chemical recycling only complements the gaps from mechanical recycling, and investments in both technologies, together with improved sorting, are required to improve the recycling rates for plastics. Plastic recycling investment projects must assess the availability of suitable plastic waste feedstock within a cost-effective sourcing radius – while simultaneously ensuring there is a viable market for recycled plastic off-take.

Improving systems for separate plastics collections from various sources and enhanced sorting technologies are slowly becoming more widespread across Europe, helping to capture the plastics before they get too contaminated for recycling in mixed waste streams.

Simultaneously, educating consumers on sorting and collaborating with local businesses that generate plastic waste volumes is needed to ensure the efficient utilization of the plastic waste management infrastructure.

Achieving the targeted plastic recycling rates requires significant efforts in various parts of the value chain, from designing recyclable products and enabling increasing separate collections of plastic waste to robust sorting and recycling infrastructure at scale. Evaluating the technological and operational options and their economics is key to moving towards circularity in both an individual business scale and in a wider system context.

Financial incentives to improve plastic circularity are increasing, driven by regulatory targets and growing consumer demand for sustainable, recycled products.

There is no one-size-fits-all approach, but rather common practices that should be adjusted based on local needs and environments.

Authored by David Powlson and Henri Mikkonen, AFRY Management Consulting.

This article is part of our AFRY Insights publication series, where experts from AFRY Management Consulting share their insights into emerging global trends across the energy and bioindustry sectors, as well as sustainability transformation.